SAP aims to expand Middle East portfolio with UAE data centre

Globally, SAP competes with companies including Salesforce.com and Oracle in offering cloud-based services. In the region, new players are emerging. Angel Navarrete / Bloomberg

SAP, Europe’s biggest technology company, aims to expand its Middle East presence with its new data centre in Dubai as players in the cloud space boost their operations in the region.

With its UAE data centre launched last week, SAP, based in Germany, will support Middle East organisations to scale up their businesses. This is the company’s third centre in the region, with the others Riyadh and Dammam in Saudi Arabia.

“The UAE data centre is fully operational, and is the centrepiece of our five-year $200 million investment plan for the UAE,” said Gergi Abboud, sen­ior vice president and general manager of SAP Middle East South – which includes the UAE, Oman, Qatar, Egypt, Lebanon and Jordan.

SAP data centres ensure the safety and accessibility of customer data stored on a cloud system.

In the second quarter of this year, SAP had a strong performance in Europe, Middle East and Africa, with cloud and software revenue increasing 10 per cent year-on-year (when using International Financial Reporting Standards) and 12 per cent year-on-year (non-IFRS at constant currencies).

Globally, SAP competes with companies such as Salesforce.com and Oracle to offer cloud services. In the region, there are other new players emerging.

Alibaba Cloud, the cloud computing arm of Chinese e-commerce group Alibaba, opened its first data centre in Dubai in November 2016 and announced plans to open its second this year.

Amazon Web Services has also signed an agreement with the Bahraini government to open at least three data centres by next year.

In March, Microsoft announced plans to open data centres in Dubai and Abu Dhabi, its first in the Middle East, as the software maker seeks to capitalise on the region’s growing demand for digitisation.

“As a publicly listed company, we do not disclose our data centre revenue,” said Mr Abboud. “However, we see tremendous potential of cloud adoption to further support our customers from both private and public sectors in the Middle East.” The size of the public cloud services market in the Mena region is expected to grow by more than 106 per cent, to $1.97 billion in 2020 from $956m in 2016, according to Statista.

The UAE is among the front runners, with its IT market forecast to rise by 20 per cent to $6.6bn by 2021 from $5.5bn in 2018, according to Fitch Solutions.

“We are seeing massive adoption of cloud solutions in the Middle East and we expect our UAE data centre to further enhance our customers’ digital journeys and also support our growth plans and momentum,” said Mr Abboud. In the Mena region, SAP’s six largest industries are oil and gas, utilities, public sector, retail, passenger travel and leisure, and banking.

The company’s global cloud revenue growth has also accelerated – with cloud subscriptions and support revenue growing 30 per cent year-on-year to €1.21bn in the second quarter of this year.

New cloud bookings grew at 29 per cent year-on-year at constant currencies in the second quarter of 2018.

In the first half of the year, the cloud provider’s global revenue was €11.26bn (Dh47.28bn), an increase of 2 per cent on a year earlier. However, Mr Abboud declined to share Middle East revenue figures.

SAP’s 2020 global ambitions outline the share of more predictable revenue (defined as the total of cloud subscriptions and software support revenue) in a range of 70 to 75 per cent of total revenue.